Budget 2024: Towards fiscal reforms

TheEdge Sat, Oct 14, 2023 09:30am - 7 months View Original


KUALA LUMPUR (Oct 14): Targeted fuel subsidy is likely one of the most difficult pills for Malaysians to swallow, having been a nation that has enjoyed fuel subsidies for decades.

Many had anticipated that the 2024 budget would entail some form of targeted petrol subsidy, but that was not announced on Friday (Oct 13) when the budget was tabled. 

However, Prime Minister Datuk Seri Anwar Ibrahim did say that a retargeted subsidy approach will be implemented in phases.

In this budget, the federal government had chosen to start with the rationalisation of diesel prices in stages. Subsidies for diesel make up about RM1.5 billion per month. 

Economists say it made sense to start with diesel, given the severity of the leakages in diesel fuel.

Besides diesel, the government has also proposed to lift the price controls on chicken and eggs, while it continues to apply a targeted subsidy approach for electricity based on electricity consumption but at the same time, provide RM40 per month electricity bill rebate for the hardcore poor, with a total allocation of RM55 million.

Even as Malaysians managed to avoid the painful targeted fuel subsidy this round, they might have been taken by surprise by the two percentage point increase in service tax proposed by the government in the budget. There is also the luxury goods tax and capital gains tax on unlisted shares introduced. 

Is this budget a prelude to more fiscal reforms in the mid-term? 

Find out in this issue of The Edge Malaysia weekly. 

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Comments

Kong Hui CHONG
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fiscal reform yet spending more, talk easy, act difficult.

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